Social networking true believers use words like engagement, responsibility, and transparency that smack of the Internet's hippie days in the late 1990s, yet social networking has proved to be much more than a passing fancy. The exploding numbers associated with the most popular sites like Facebook and Twitter inspire awe in even the most jaded statisticians. Time spent on social networks increased 277% in the United States last year, according to media research firm Nielsen, and Twitter itself grew more than 500%.

Now the social media category is primed to emerge as the most significant business enabler since the Internet itself. Organizations must ask themselves seven important questions about their plans for leveraging social networking over the next 12 months. Their answers may spell the difference between success and failure in the coming decade.

1. Are my competitors continuing to invest in social networking?

Measuring yourself against your competition isn't the best way to decide strategy, but it's a fair question given the flash-in-the-pan potential of social networking. And the answer is yes.

"I'm hiring," says Christopher Barger, director of social media at General Motors. That's the good news. The bad news is that, last July, Barger had five people in his social media group at GM; today, there's only him. Barger says part of that reduction is due to attrition but says some has to do with his "immerse and disperse" strategy for spreading social media awareness and expertise across the automaker. People with whom he worked over the last year are now placed in the company's communications, design, performance vehicle, and emerging technology groups.

While GM isn't typical in terms of attrition--the company went through some financial difficulty last year; you might have read about it--it's typical in its desire to maintain its investment in social networking. According to a Deloitte survey of more than 400 companies, conducted late last year with Beeline Labs and the Society for New Communications Research, 94% of respondents intend to maintain or increase their investment in enterprise social networking tools this year.

For its second annual "Tribalization Of Business" survey, Deloitte polled companies that maintain online communities of 100 members to more than 1 million, created on their own sites or on public social sites such as Facebook and MySpace. About 60% of those communities are less than a year old.

2. Where's the ROI?

This is the $64,000 question. And it's not easy to answer because it depends on what it is you're trying to accomplish with your social media strategy. "Right now it's owned by the marketing division and looked on as a low-cost or no-cost way of amplifying your marketing message," says Ed Moran, director of product innovation at Deloitte.

Except social networking isn't a marketing activity in the one-to-many, shotgun-blast approach that traditional marketing is built on. Or it shouldn't be.

"Sales isn't necessarily the end goal," says Dan Shust, director of emerging media for Resource Interactive, an Internet consulting firm. Shust is talking specifically about Facebook fan pages, a grassroots effort brought to light when a Coca-Cola page created by two Coke fans became a social media phenomenon. Corporate marketers quickly realized the potential; Resource Interactive helps companies develop and support Facebook fan pages built around brands or products.

Shust says social network marketing is about engagement: fostering a community of individuals who represent the human face of a company or organization. It's about conversations, not messaging; relationships, not salesmanship.

All that doesn't lend itself to hard ROI numbers. "That's a challenge in most marketing models," says Barbara McDonald, VP of marketing for the Public Relations Society of America. "When we incorporate social media into our campaigns, we get better lift, but it's hard to track."

ROI shouldn't be so difficult, insists Deloitte's Moran, and it isn't when it comes to other ways social media can be used by companies. Take customer service, which Moran says is an underused opportunity to leverage the relationship-building and community spirit of social networks. The cost of customer support is easy to calculate and should be familiar to most executives. When a customer has a problem resolved in an online community, either by a corporate representative or especially by another community member, and as result the customer doesn't call the support line, the cost savings can be measured.

3. Which way works best?

Social media is still an amorphous concept, represented by the microblogs, wikis, forums, chat rooms, and RSS feeds found on thousands of corporate and organizational Web sites, as well as by the familiar sites such as Friendster, Facebook, and Flickr.

There are legendary corporate success stories. Starbucks, for example, started an online community called My Starbucks Idea that lets registered members suggest ideas for products and services and comment and vote on the ideas of others. It also features feedback by Starbucks representatives on actions taken in connection with those ideas. At last count, the site had garnered more than 20,000 ideas for new coffee products alone, and another 60,000 ideas for everything from merchandise to new locations. Ideas implemented range from frequent-buyer cards to low-calorie snacks.

The public social networks are less familiar territory for most companies. Joel Comm, CEO of InfoMedia, a social media consulting firm, recommends that companies maintain a four-pronged public networking strategy: Facebook, LinkedIn, Twitter, and YouTube. While there are many, many other social network sites--and more every day--these four have emerged as the dominant players.

Comm, author of Twitter Power: How To Dominate Your Market One Tweet At A Time (Wiley, 2009), has his personal favorite--Twitter--where "a little goes a long way," he says. As an example, he points to Comcast's Frank Eliason, whom he credits (as have others) with turning around the company's dismal customer service reputation, exacerbated by an embarrassing video that hit YouTube a couple of years ago called "A Comcast technician sleeping on my couch," by using his corporate Twitter account, Comcastcares.com. Eliason has more than 36,000 followers on Twitter and has generated more than 39,000 tweets. "What they're paying this one gentleman is generating huge returns for them," Comm says.

What the public sites don't allow is "complete control over content," says Tom Erickson, CEO of Acquia, which distributes and supports Drupal, an open source software platform used in developing social media sites. Drupal lets companies incorporate blog, search, and wiki capabilities in their online communities, and directly integrate various forms of content such as video. With Facebook, Twitter, and other public sites, "you're limited in the type of content and placement and style," Erickson says.

Most observers agree that companies must develop a dual social media strategy that incorporates homegrown online communities and involvement with the public social networks.

4. How deep within my organization should social networking be allowed to penetrate?

This is a sticky question, for several reasons. First, corporate culture is historically closed and conservative. Second, some high-profile incidents relating to employee abuse of social networks have put the fear of God into some executives regarding reputation management and legal exposure.

And there's still a whiff of the old complaints of workplace distraction that accompanied the introduction of e-commerce sites. Morse PLC, an IT services company, touted research late last year that it claims demonstrates that the use of social networks at work costs U.K. businesses 1.38 billion pounds (U.S. $2.23 billion) a year in lost productivity.

Nonetheless, many companies are driving social media deep into their organizations. General Motors offers a video course on its intranet that introduces neophytes to the basics of social networking and the company's policies concerning it; about 3,000 GM employees have viewed that course. A more advanced course offered by Barger's group trains employees to become social media proselytizers and teachers; about 500 have completed that training.

The objective, for GM and every other company that embraces a wide-open social networking strategy, is twofold: Let subject matter experts interact directly with customers, potential customers, and partners; and promote authentic voices as company representatives in the community.

5. Is it necessary to have a corporate policy around social networking?

Yes, and it needs to be three things: short, simple, and clear. Many companies, including IBM and Intel, have made public their policies concerning the use of social networking tools. A Web search will uncover a list of them.

The Public Relations Society of America will make its policy, covering about 30,000 members, available next month, says VP of marketing McDonald. That policy, based on one introduced earlier this year by Australian telecom company Telstra, embraces the "three R's"--representation, responsibility, and respect. Representation means that you're forthcoming about your affiliation and agenda, so that "people have context," says McDonald. Responsibility means that what you share is factually accurate and relevant, and that you strive to "find the expert" to best answer a query or concern. Respect involves "being civil and understanding," she says.

While social media are an excellent vehicle for generating ideas, those ideas must get to the people in the organization who can make the best use of them. "We're not convinced that a lot of the ideas that come in actually get to the right people in the enterprise," Deloitte's Moran says.

That's because at most companies, the social media function is almost exclusively owned by a single department: marketing. Instead, Moran says, companies should create centers of excellence to disseminate the ideas culled from social networks and online communities--on products, markets, talent, trends--to the right people who can act on them.

6. What can social media teach me about internal collaboration?

Social networking woke up companies to the way people want to interact with each other, and the ways they don't. "The corporate intranet has become a place where corporate documents go to die," says Srinivas Balasubramanian, CEO of Photon Infotech, an IT consulting firm.

Photon Infotech last year helped Johnson & Johnson overhaul its intranet by adding social media functions. In fact, a growth area for the consulting firm is a product that Balasubramanian says "gives you everything that Facebook and Twitter and YouTube give you on top of SharePoint."

At least one veteran Web 2.0 developer thinks companies should let employees use Facebook, LinkedIn, or Twitter, whichever they choose to get their jobs done, rather than force them "onto captive social networks, or monolithic enterprise platforms." Chris Richter is founder and CEO of startup Socialware, which sells software that controls employees' interactions with public social sites. The company's risk manager module, for instance, monitors and stores content sent by employees to outside social networks and can block anything proprietary or objectionable.

Still, if companies think social networking is about technology, they're missing the point, says John Faber, chief operating officer of af83 Inc., a social media services company. Transparency and knowledge flow are key, yet companies are using social networking techniques to re-create closed, segmented, hierarchical structures and still expecting social media-type benefits. "It won't work," Faber says.

7. What's next?

Two words that come up often as social media trends are measurement and analytics--as in, is there a way to measure interest and involvement, and to derive insights from raw social networking data? "All this user-generated content is being collected," says Ari Lightman, a marketing consultant. "The idea is to mine through this content to look for correlations."

Those correlations can serve corporate interests in several ways. For instance, they can shed new light on a company's constituency. Toward that end, about a third of respondents to Deloitte's "Tribalization" survey are attempting to capture data on "lurkers," nonactive members of online communities. The idea is to track what these low-profile people might do with the information they get in those forums, such as go off and make purchases or recommendations to friends or comment on other sites.

Online communities can be analyzed for market trends. Tech and entertainment companies are investing heavily in this area, says Marshall Toplansky, president of WiseWindow, which specializes in so-called sentiment analysis services.

One underexploited area of social media analytics has to do with product development--mining online communities for ideas and trends related to product areas. That's mainly because, once again, social media are considered a marketing function, notes Deloitte's Moran. Among the business objectives listed in Deloitte's social media survey, respondents ranked "bring outside ideas into organizations" fourth, behind generating word-of-mouth, increasing customer loyalty, and increasing product/brand awareness.

Mobility is another social media opportunity. GM's Barger says one of his priorities this year is to help company employees make use of Foursquare, which offers smartphone users location-based information-sharing in a Twitter-like format.

Look for more use of public social networks and a movement away from corporate online communities and destination sites. It's the opposite of the "build it and they will come" strategy.

An early harbinger of that trend is a tool developed by Resource Interactive called Off The Wall that lets potential customers on Facebook fan pages receive product inducements through the Facebook news feed and then buy that product directly from the Facebook wall. Resource Interactive's Shust says people have moved on from looking at the Web as a series of destination sites and are "now really starting to exist on the Internet." And while engagement is still the main purpose of social media, he explains, there can be a logical conclusion: "Engagement, and then eventually sales."

When it comes to using social media for business gain, the potential is there--perspective is what's needed. Instead of taking a narrow view, advises consultant Lightman, organizations must use social media to collaborate, innovate, and unlock "knowledge repositories that they didn't know existed."